Why Are Inventories Included in the Computation of Net Income

question 56

Multiple Choice

Why are inventories included in the computation of net income?

• A) to determine cost of goods sold
• B) to determine sales revenue
• C) to determine merchandise returns
• D) Inventories are not included in the computation of net income.

---

Definitions:

Denominator

In a fraction, the number below the division line, indicating the total number of parts.

Degrees of Freedom

The volume of exclusive values or quantities that can be allotted to a statistical distribution.

DfWG

Degrees of Freedom Within Groups, related to variance analysis, expressing the number of independent pieces of information within groups.

Respondents

Individuals who provide data or answers in a survey, study, or experiment.